Supreme Court Rules On Retirement Funds – In 8-0 Decision, They Just Held Sponsors’ Feet To The Fire

 

What’s Happening:

The Supreme Court is busy doing work on behalf of the American people. The mainstream media might not cover all of it, but it needs to be discussed. One particular case was brought before the court and it touched on Americans’ ability to save up for retirement.

A group took an employer to court, claiming their 401(k) policy confused employees. On top of that, they did not explain that some of the options included high fees that put a financial burden on investors.

It seems they didn’t want to give employees all the information they needed to make the best decision. So, the Supreme Court, in an 8-0 ruling, put their feet to the fire.

From JD Supra:

On January 24, 2022, the U.S. Supreme Court decided Hughes v. Northwestern University, No. 1401, holding that an ERISA fiduciary that offers some prudent investment options in a retirement plan is not thereby categorically protected against a claim that other options are imprudent…

The Court held that offering some prudent investment options does not categorically bar a claim alleging that other options are imprudent or that the selection of options as a whole is imprudent. Rather, the Court clarified, ERISA’s duty of prudence is a “context-specific inquiry,” which requires plan administrators to “monitor” all its fund offerings and “remove” the “imprudent ones.”

The Supreme Court ruled in favor of employees, deciding that retirement plan providers are not immune from claims against what they offer. The court stated that just because the provider offered a few “prudent” investment options does not mean they can get away with offering “imprudent” offers. In this case, investment plans with high fees.

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